Estman Kodak, a pioneer of camera development, is now a multinational corporation with products for printing and publishing, document, health and space imaging. During the beginning of the century it was facing headwinds from new digital photography entrants threatening its traditional business.
In 2005 the company announced a large third quarter loss. However, the loss had to be revised down. The revision was blamed on a 'faulty' spreadsheet. Unfortunately we do not have any information about the specific problem with the spreadsheet.
The initially reported loss for the third quarter was $1.029 Billion. However, after finding accounting errors, the loss was restated with additional $9 Million, to $1.038 billion. The loss was due to restructuring and a pivot towards digital photography business.
Robert Brust, Kodak's CFO had the following to say about the error:
As we have previously said, the magnitude of the worldwide restructuring program the company is undertaking imposes significant challenges to ensure the appropriate accounting.
He added that the error was related to severance miscalculation. The severance pay accrued was off for just one employee. Brust categorized the situation as "an internal control deficiency that constitutes a material weakness that impacted the accounting for restructurings."
The severance error was traced to a faulty spreadsheet, according to Gerard Meuchner, Kodak spokesman.
He added that the problem was expected to be fixed by the year's end. The initial announcement was made in October which makes it less than two months to fix the issue.
In another part of the report the error was reported as amounting to $11 Million difference. All in all, even with that higher figure, the error constituted an adjustment of around 1%, which probably did not drastically change the mood of the investors.